Construcciones El Condor is the road infrastructure leader in Colombia. It has 3,500 direct employees, owns 1,271-piece equipment and machinery fleet, and possesses a strong presence in the United States. It has a long history coupled with a significant amount of experience, as it had already executed more than 95 projects and to date has an important participation in 11 concessions. This time, the unfavorable situation presented this year was somehow reflected in the firm’s semester results.
At the end of the first half of the year, semester revenues from ordinary activities amounted to 258.4 billion Colombian pesos, representing a decrease of 25.59% compared to the same period last year. This unfavorable result is explained by the ending of previous years’ projects, projects that are on hold due to environmental and real property decisions, and the fact that one of its more important concessions is in the initial stages. This could be troublesome but thanks to excellent management, operating costs were reduced too. Operating costs decreased by 14.6%, representing a reduction of COP 44.4 billion.
In this semester, net losses were COP 7.6 billon, equivalent to -2.97% of the revenues from ordinary activities in the period. The losses were caused by the inclusion of Concesión Vias de las Américas´ results through the participation method, but as it is only an accounting effect it does not affect the company’s financial situation. Without it, net profits would have been COP 4.6 billion.
Operating EBITDA amounted to COP 22.5 billion which can be seen as an EBITDA margin of 8.72%. EBITDA margin experienced a reduction compared to the prior year semester where it ended up at 14.91%. Similar to the revenue analysis, this reduction is explained by the firm’s transition during 2021 coupled with the start of new constructions contracts. Aside from the national strike, the firm was affected by such external shocks as the "La Niña" phenomenon which harmed productivity and profits.
Even though the results in this semester were not optimal, there is nothing to worry about. In this sector, the combination of the completion of projects with the start of new ones result in a less profitable period. This is a completely natural cycle for companies in this sector.
Regarding its financial situation, the company improved compared to the previous year.
Assets totaled COP 2.22 trillion, of which 1.9 corresponded to its investment portfolio. This result represented an increase of 3.7% compared to the figure reported at the end of the last year. The ratio of current to concurrent assets was 44% and 56%, respectively.
On the other hand, liabilities ended up at COP 1.57 trillion, 56% were current obligations, and 44% were concurrent.
The firm’s debt plateaued at the same levels recorded at the end of December 2020 because the payment received from La Pintada concessions was used to prepay financial obligations.
At the end of the first semester, the firm’s current ratio passed from 1.3x in December 2020 to 1.49x. This is due to the change in debt structure; the firm shifted from current liabilities to concurrent liabilities.
The company’s equity as of June 2021 closed at COP 1.07 trillion.
As was previously mentioned, the position in which the firm stands is transitory, and the clearest proof is that the firm had already disclosed its backlog, which is defined as the balance of works contracted and to be executed. The backlog amounted to COP 1. 869 billon; this figure already comprises COP 106, 724mm of the invoicing executed during the quarter. The backlog could have been bigger if the adjudication of the Sanatana Moca Neiva (contract made few days after the end of the quarter) would have been included. The backlog would have ended at COP 2.920 billion.
Its share price closed at COP 940, experiencing a decrease of 21.6%. Nevertheless, if the price is compared to June 2020, it had a marginal increase of 2.29%. Regarding the dividend yield, the company's stock market maintained a return of 2.6%, increasing slightly in comparison to the first quarter of 2021 where it stood at 2.3%.
This semester was a tough one; the combination of the social, sanitary, and even natural events had a significant impact on the company’s processes. However, the National Administrative Department of Statistics (DANE) in Colombia reported that the recovery of the economy keeps advancing. In this quarter, GDP grew 17.6%, of which 40% was explained by the commercial sector, 32.5 % by the manufacturing industry, and 17% by the construction sector.
These results joined with the massive firms’ backlog probably will return Construcciones el Condor to the right path.
